Custom, Excise & Service Tax Tribunal
M/S.Bhayana Builders Pvt. Ltd vs Cce, New Delhi on 28 March, 2014
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:28.03.2014
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Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
Service Tax Appeal No.ST/247/2008
(Arising out of Order-in-Original No.09/VKG/CST/2008 dated 17.01.2008 passed by the Commissioner of Service Tax, Commissionerate, New Delhi.)
M/s.Bhayana Builders Pvt. Ltd. Appellants
Vs.
CCE, New Delhi Respondent
Appearance:
Shri B.L. Narsimhan, Advocate for the appellant. Shri Amresh Jain, DR for the respondent. Coram :
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) Final Order No. 51736/2014/Dated:28.03.2014 Per Rakesh Kumar:
The appellant are engaged in providing of taxable service of commercial or industrial construction and construction of complex service for which they have taken service tax registration. For discharge of duty liability, they were availing of exemption under notification no.15/2004-ST dated 10.09.2004, as amended, applicable to industrial or commercial service and notification no.18/2005-ST dated 7.6.2005 applicable to construction of complex service and accordingly were paying service tax after availing 67% abatement from the gross amount charged. However, it was subsequently found that they were also receiving cement and steel free of cost from some of their customers viz. M/s. Laconet Hemant India Ltd., Katara Estates Ltd., M/s. Golcha Buildtech (p) Ltd., M/s. DLF Universal Ltd. and M/s. Ashok Leyland but the value of free supply material was not included in the gross amount charged. It was also found that in respect of a building constructed for M/s. Ashok Leyland Ltd., though it was used for commercial purposes and as such, service provided by the appellant to M/s. Ashok Leyland Ltd. in respect of this construction was commercial or industrial service, no service tax has been paid in respect of the same. It was also found that the appellant had constructed a new building and staff quarters for Tanzania High Commission and had not paid any service tax in respect of the same by availing exemption notification no.16/2002-ST dated 2.8.2002 which was available to UNO or International Organizations. According to the department, this exemption was not available and the appellant were liable to pay service tax in respect of the same gross amount charged for this construction.
1.1 Accordingly, in view of the above, a show cause notice dated 14.8.2006 was issued to the appellant for demand of service tax amounting to Rs.50,50,994/- in respect of a period 10.09.2004 to 16.06.2005 under proviso to Section 73(1) of the Finance Act, 1994 along with interest thereon under Section 75 ibid and also for imposition of penalty on the appellant under Section 76 and 78 ibid. The show cause notice also sought appropriation of an amount of Rs.39,85,252/- along with interest of Rs.1,57,662/- voluntarily deposited during investigation.
1.2 The show cause notice was adjudicated by the Commissioner vide order-in-original no.09/VKG/CST/2008 dated 18.01.2008 by which the above mentioned service tax demand was confirmed against the appellant along with interest thereon and the amount of service tax together with the interest voluntarily paid during investigation was appropriated and besides this, while penalty of Rs.50,50,995/- was imposed on the appellant under Section 78, penalty of Rs.200/- per day was imposed under Section 76. Against this order of the Commissioner, this appeal has been filed.
1.3 Since one of the main issue is involved in this case in respect of which service tax involved is Rs.31,58,281/-, pertained to the dispute as to whether the value of free supply material supplied by the customers is to be included in the gross amount for the purpose of notification no.15/2004-ST dated 10.09.2004 and notification no.18/2005-St dated 7.6.2005 and since on this issue, there were conflicting judgments, a larger bench was constituted by the Honble President for deciding this issue. Accordingly, hearing in respect of this issue involved in the present appeal and 22 other appeals took place on 11.6.2013 to 14.6.2013. The Larger Bench decided this issue vide judgement reported in 2013 (32) STR 49 (Tribunal-LB), wherein it was held that the value of free material supplied by the customers is not to be included in the gross amount charged for the purpose of the above mentioned exemption notification no.15/2004-ST and notification no.18/2005-ST.Accordingly, this appeal was listed for final hearing today for decision in accordance with the decision of the Larger Bench.
2. Heard both the sides.
3. Shri B.L. Narsimhan, Advocate, ld. Counsel for the appellant, pleaded that in this matter while the service tax demand of Rs.31,58,281/- is in respect of the value of the free supply material, demand of Rs.10,65,742/- is in respect of the work done for Tanzania High Commission and the demand of Rs.8,26,971/- is in respect of construction job for M/s. Ashok Leyland Ltd., that the issue of inclusion of value of free supply material in the gross amount charged for the purpose of exemption notifications stands decided in favour of the appellant, that the service tax demand of Rs.10,65,742/- in respect of the construction of building and staff quarters for Tanzania High Commission is not sustainable as the construction of Embassy and staff quarters for an Embassy is not construction of commercial or industrial building as this building was not meant for commercial or business activity, that as regards the service tax demand in respect of the construction for M/s.Ashok Leyland, this building at the time of construction was not meant to be used for commercial purposes and just because subsequent to the construction on account of charge of use permitted, the building was used for commercial purposes, service tax cannot be demanded, that the service tax demand against M/s.Ashol Leyland Ltd. also includes the service tax demand on account of free supply material supplied by M/s. Ashok Leyland Ltd., which is already included in the amount of Rs.31,58,281/- and that in view of the above, while the service tax demand of Rs.10,65,742/- in respect of the construction of building for Tanzania High Commission is not sustainable, the service tax demand of Rs.8,26,971/- in respect of the construction for M/s. Ashok Leyland Ltd. is also not sustainable and in any case, the same needs to be requantified.
4. Shri Amresh Jain, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner and emphasized that the construction of building for Tanzania High Commission would attract service tax as civil or industrial construction service.
5. We have considered the submissions from both the sides and perused the records.
6. The service tax demand of Rs.31,58,281/- without any dispute is in respect of the value of free supply material supplied by the customers. Since this issue stands decided in favour of the appellant by the Larger Bench decision of the Tribunal, as mentioned above, this demand is not sustainable. The same is set aside.
7. As regards the service tax demand of Rs.8,26,971/- in respect of the project of M/s. Ashok Leyland Ltd., since this building was used for commercial purposes, the construction service provided in respect of the same would have to be treated as civil or industrial construction service. However, the appellants plea that the amount of Rs. 8,26,971/- also includes the service tax demand on the free supply material supplied by M/s. Ashok Leyland Ltd. and service tax charged on account of free supply material in all the project executed by the appellant is included in the amount of Rs.31,38,281/-, this point has to be examined by the adjudicating authority for which the same would have to be remanded.
8. As regards the service tax demand of Rs.10,65,742/- in respect of the construction of Tanzania High Commission, we are of the view that building to be used by the Tanzania High Commission is not covered by the definition of Commercial or Industrial Construction Service as given in Section 65(25b) of the Finance Act, 1994, as according to this provision, commercial or industrial construction means
(a) construction of a new building or a civil structure or a part thereof; ..........................................................................
..
which is -
(i) used, or to be used, primarily for; or
(ii) occupied, or to be occupied, primarily with; or
(iii) engaged, or to be engaged, primarily in, commerce or industry or work intended for commerce or industry, . In view of the above, construction of building and staff quarters for Tanzania High Commission would not be covered by the commerce or industrial construction as an Embassy or High Commission building cannot be said to be meant for commerce or industry.
9. In view of the above discussion, the service tax demand of Rs.31,58,281/- in respect of the value of free supply materials supplied by the customers and the service tax demand of Rs.10,65,742/- in respect of the construction of Tanzania High Commissions building and their staff quarters is set aside. As regards the service tax demand of Rs.8,26,971/- in respect of the construction for M/s. Ashok Leyland Ltd., the matter is remanded to the original adjudicating authority for re-quantification of the demand in term of directions on this order. The penalty under section 76 and 78 is also set aside and the same is to be re-determined after requantification of the service tax demand. The appeal stands disposed of as above.
[operative portion already pronounced in open court.] (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) Ckp.
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